“Pretty Please” 6
American International Group Inc. Chief Executive Officer Edward Liddy asked employees paid bonuses exceeding $100,000 to repay half, responding to public anger over $165 million in retention pay after a taxpayer-funded bailout.
Liddy said he would never have approved the compensation contracts, which were signed before he took over last year, and he’s asked employees to “do the right thing” on their bonuses.
As I heard someone point out in a podcast I listened to today, it is not uncommon for companies in trouble to approach creditors and ask to have debt obligations renegotiated. (Go to the website and search for March 17, 2009–it’s Hour Two–or listen here (MP3).
And it is certainly not uncommon for Repulsicans to demand that working persons give up their rights.
So why is it so difficult for overpaid slugs who have helped destroy the world economy to give up a few millions of their bonuses?
I forget. They are rich (or will be after they get their bonuses).
They are therefore virtuous.
Aside: Office building. For sale. Cheap. Suitable for Masters of the Universe, their heirs, and pretenders.
March 18, 2009 at 9:19 pm
I’ll take Ed Liddy over those gasbag idiots in Congress any day.
March 18, 2009 at 11:11 pm
You got him.
March 19, 2009 at 5:35 am
Ed, not G. Gordon.
The bonuses were a terrible idea. However, the lawyers apparently told Liddy he had no choice and apparently the Fed representatives attending the Compensation Committee and Board meetings signed off on the idea. Liddy could have simply abrogated the contracts and made the employees sue for their bonuses. That probably would have been the best idea from a PR perspective.
Liddy was asked to come out of retirement and attempt to fix the tremendous mess at AIG. Maybe he will step down and Barney Frank will take over. I’m sure he will fix things by the end of the month. Lots of people are responsible for the mess in the economy. But the government can’t fix things. The government has never been able to fix the economy. People from business (including some of the hated Wall Street people) will have to work with the government to get things back on track.
Back to my original comment. When it comes to the economy, given the choice between listening to T. Boone Pickens, Jamie Dimon, and Warren Buffett or listening to Tim Geithner, Sheila Bair, and Lawrence Summers, I’d take the first group any day. After listening to some of the members of congress during various committee hearings, I’m convinced a few of them can’t spell AIG.
March 19, 2009 at 7:09 am
The Liddy needs new lawyers.
About who to listen to, I nominate Roubini and Krugman. They saw this coming half a decade ago.
But they are consider “liberals” and think Atlas doesn’t shrug, Atlas sucks, so, of course, no one listened to them.
March 19, 2009 at 11:05 am
So now the geniuses in congress are going to solve the problem by passing a retroactive law that will tax the bonuses at 90%. If it goes to court, I believe such a law would be found unconstitutional. As unfair as our tax laws can be, I do not believe congress can single out a specific bonus from a specific employer and tax it at a different rate than the same type of bonus paid by a different employer.
So we’ll waste time and money in the courts, the bonuses will end up getting paid, the taxes will be refunded (with interest), and the lawyers will make money. Business as usual.
From Bloomberg News: Senate Banking Committee Chairman Christopher Dodd said the Obama administration asked him to insert a provision in last month’s $787 billion economic- stimulus legislation that had the effect of authorizing American International Group Inc.’s bonuses.
Dodd, a Connecticut Democrat, said yesterday he agreed to modify restrictions on executive pay at companies receiving taxpayer assistance to exempt bonuses already agreed upon in contracts. He said he did so without realizing the change would benefit AIG, whose recent $165 million payment to employees has sparked a public furor.
Sounds like folks in Washington need to wear safety glasses or they may get poked in the eye with all the finger pointing that’s going on…
March 19, 2009 at 5:40 pm
I have an idea.
Pay the bonuses (to an employee of any company that’s taken a handout) in that company’s STOCK. Stock that can’t be traded, sold, or given away, until said company is back in the black & the taxpayers paid back. Then let them cash it in & leave.
That could help retention.
(I’m about 1/2 kidding)